The Effect of General Allocation Fund and Government Capital Expenditure on Regional Gross Domestic Product in the Toba Caldera Geopark Area (A Panel Data Study of Seven Regencies in the Toba Caldera Geopark Area, 2010–2024)

Abstract

This study examines the effect of the General Allocation Fund (DAU) and government capital expenditure on Regional Gross Domestic Product (PDRB) in seven regencies surrounding the Toba Caldera Geopark area — Simalungun, Toba, Samosir, Karo, Humbang Hasundutan, Dairi, and Tapanuli Utara — over the period 2010–2024. Using annual secondary data from the Central Bureau of Statistics (BPS) and the Directorate General of Fiscal Balance, the study applies panel data regression on a log-log model. Model selection through the Chow and Hausman tests indicates that the Fixed Effect Model (FEM) is the most appropriate specification. Because the classical assumption tests detected heteroscedasticity, the final estimation was corrected using White cross-section robust standard errors. The results show that DAU has a positive and statistically significant effect on PDRB (β = 1.1366; t = 3.0853; p = 0.0081), while government capital expenditure has a positive but not statistically significant effect on PDRB (β = 0.1889; t = 1.1618; p = 0.2647). Jointly, the two variables explain 91.12% of the variation in PDRB (R² = 0.9112; F = 123.0775; p = 0.000). These findings indicate that fiscal transfers from the central government play a stronger role than local capital spending in driving regional economic performance in this geopark area, and that regional government investment has not yet translated into a statistically measurable effect on output during the period studied.